AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.4

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement ("AGREEMENT") is made by and between Tesfaye Hailemichael (the "Executive") and Mitek Systems, Inc., a Delaware corporation (the "Company") as of September 18, 2006. The employment relationship herein provided shall become effective (the "Commencement Date") as of the Closing Date (as defined therein) of the Amended and Restated Agreement and Plan of Merger by and among the Company, Mitek Acquisition Sub, LLC, a Wyoming limited liability company, Parascript, LLC, a Wyoming limited liability company and Parascript Management, Inc., a Wyoming corporation, dated as of the date hereof (the "Merger Agreement"). In the event the Merger Agreement is terminated prior to the Closing Date, this Agreement shall be void and of no further force or effect upon such termination.

RECITALS

The Company wishes to employ the Executive as Chief Financial Officer of the Company, and the Executive wishes to be employed as Chief Financial Officer of the Company.

The Company and the Executive previously entered into that certain Employment Agreement dated July 13, 2006.

The Company and the Executive wish to amend and restate the Employment Agreement dated July 13, 2006 in its entirety and to instead set forth in this AGREEMENT the terms and conditions under which the Executive is to be employed by the Company.

Now, therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Company and the Executive hereby agree as follows:

• 1.1 Term . The term of the Executive’s employment under this AGREEMENT shall be for a minimum one (1) year period commencing on the Commencement Date and ending whenever terminated in accordance with the terms of Article 8 of this AGREEMENT ("Termination Date"). The period of time during which the Executive shall be employed by the Company under this AGREEMENT shall be referred to as the Employment Period.

  1.2 Title . From and after the Commencement Date, the Company shall employ the Executive as Chief Financial Officer of the Company, and the Executive shall have the duties, responsibilities and authority consistent with such position, as described in Section 1.4 below and the Bylaws of the Company.

  1.3 Duties . From and after the Commencement Date and for so long as he is employed under this AGREEMENT, the Executive (i) shall devote his full professional time and attention, best efforts, energy and skills to the services required of him as an employee and Director of the Company, except for paid time off taken in accordance with the Company’s policies and practices and subject to the Company’s existing policies pertaining to reasonable periods of absence due to sickness, personal injury or other disability; (ii) shall use his best efforts to promote the interests of the Company; (iii) shall comply with all applicable governmental laws, rules and regulations and with all of the Company’s policies, rules and/or regulations applicable to the employees of the Company; and (iv) shall discharge his responsibilities in a diligent and faithful manner, consistent with sound business practices and in accordance with the directives of the Board of Directors of the Company. The Executive shall report directly to the Company’s Chief Executive Officer and shall actively participate in the preparation and presentation to the Board of Directors of all financial reports regarding the business, operations and prospects of the Company. In addition to the Executive’s

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• normal leadership responsibilities during his employment with the Company, he shall (a) manage all of the Company’s financial, treasury and audit obligations, and (b) perform any other duties assigned to him by the Company’s Board of Directors.

  1.4 Obligations of Executive . The Executive agrees and acknowledges that he owes a duty of loyalty, fidelity and allegiance to act at all times in the best interests of the Company, to not knowingly become involved in a conflict of interest and to not knowingly do any act or knowingly make any statement, oral or written, which would injure the Company’s business, its interest, or its reputation, unless required to do so in a legal proceeding by a competent court with proper jurisdiction. The Executive further agrees to comply at all times with all applicable policies, rules and regulations of the Company, including, without limitation, the Company’s policy regarding trading in its Common Stock, as may be in effect from time to time.

  1.5 Place of Employment . The parties agree that the Executive’s place of employment shall be in San Diego County, California.

  1.6 Life Insurance . If requested by the Company to do so, the Executive will cooperate with the Company’s efforts to procure a "key man" term life insurance policy on the Executive, with benefits payable to the Company.

  1.7 Indemnification . The Company shall indemnify and defend the Executive in accordance with its standard indemnification policy for officers and directors to the maximum extent permitted by law.

• 2.1 Prohibited Outside Activities . The Executive agrees and promises that during the Employment Period, he will not be engaged in any other business or as a consultant to or general partner, employee, officer or director of any partnership, firm, corporation, or other entity, or as an agent for any person, or otherwise, if such activity is pursued for gain, profit, or other pecuniary advantage, without the approval of the Board of Directors of the Company.

  2.2 Investment . Nothing in this Article 2 shall be construed as preventing the Executive from engaging in the investment of his personal assets so long as such investment activity does not require: (1) any participation on the Executive’s part in the operation or the affairs of the enterprise or enterprises in which such investments are made or (2) the rendering of any services by the Executive to any such enterprise.

  2.3 Civic and Charitable Service . Nothing in this Article 2 shall be construed as preventing the Executive from serving on civic or charitable boards or committees, so long as such activities do not interfere with his performance of his obligations under this AGREEMENT.

  2.4 Other Board Service. Subject to the approval of the Board of Directors of the Company, the Executive may serve as a member of the board of directors of other corporations or business enterprises, so long as such activities do not interfere with his performance of his obligations under this AGREEMENT.

• 3.1 Amount . From and after the Commencement Date, the Company shall pay the Executive an annual base salary ("Base Salary"), payable in installments consistent with the Company’s payroll practices and subject to normal withholdings. The initial annual Base Salary shall be $225,000.00.

  3.2 Adjustment . The Executive’s Base Salary shall be subject to annual review and adjustments during the Employment Period on or about the anniversary of his Commencement Date. Recommendations for adjustments, if any, shall be made at the sole discretion of the Compensation Committee of the Company’s Board of Directors. Any such recommendations shall then be considered by the Board of Directors of the Company. If the Board of Directors determines that the Executive’s Base Salary is to be increased, such increase shall be effective as of each such anniversary date.

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• 4.1 Nature . Beginning January 1, 2007, the Company shall pay to the Executive, in addition to Base Salary, bonus compensation ("Bonus Compensation") on an annual basis on the terms and conditions set forth in this Article 4.

  4.2 Amount . The Board of Directors shall set specific financial and other performance goals ("Performance Goals") for each fiscal year of the Company. The amount of the annual bonus to which the Executive shall be entitled shall depend upon the Company’s achievement of such Performance Goals. If the Company achieves 100% of its Performance Goals for a given fiscal year, then the Executive shall be entitled to a bonus equal to 30% of his then-current Base Salary. A bonus of 30% of Base Salary, payable to the Executive if the Company attains 100% of its Performance Goals, shall be considered the Target Bonus. If the Company achieves more than 100% of its Performance Goals, then the Executive shall be entitled to proportionate Bonus Compensation of up to 125% of the Target Bonus. The maximum amount of the Bonus Compensation to which the Executive shall be entitled for a particular fiscal year shall not exceed 125% of his Target Bonus, even if the Company achieves more than 125% of its Performance Goals. If the Company achieves less than 100%, of its Performance Goals, then the Executive shall be entitled to the percentage of the Performance Goals reached multiplied by 30% of the then-current Base Salary. For example, if the Company achieves 90% of its Performance Goals, the Executive shall be entitled to a bonus of 27% of his then-current Base Salary (equal to 90% multiplied by 30%). Notwithstanding the foregoing, the Executive shall not be entitled to Bonus Compensation for any fiscal year in which the Company achieves less than 75% of its Performance Goals.

  4.3 Payment . If Bonus Compensation is due to the Executive for a particular fiscal year, such Bonus Compensation shall be payable to the Executive, subject to regular withholdings, promptly after the completion of the audit of the Company’s financial statements for such fiscal year.

  4.4 No Limitation on Discretionary Bonuses . This Article 4 describes the Bonus Compensation to which the Executive shall be entitled, dependent upon the Company’s achievement of its Financial Performance Goals. Nothing in this Article 4 shall be construed to limit the ability of the Board of Directors to grant a discretionary bonus to the Executive, regardless of the Company’s performance against its Financial Performance Goals.

• 5.1 Group Insurance Plans . From and after the Commencement Date, the Executive shall be entitled to participate in the Company’s group medical, dental, long term disability and short term disability insurance programs on the same terms and conditions applicable to the other senior officer(s) of the Company.

  5.2 Retirement Plan . The Executive shall be entitled to participate in the Company’s 401(k) retirement plan, under the terms and conditions of said plan.

  5.3 Health and Exercise . The Company shall reimburse the Executive for the out-of-pocket expense of an annual executive physical health examination and for monthly dues for the Executive’s membership in a health and exercise facility, if the Executive is a member of or joins the same, up to a maximum amount of $3,000 annually.

  5.4 Vacation . The Executive shall be entitled to four (4) weeks of paid vacation in each year of his Employment Period. Such vacation shall be taken at such times as the Company and the Executive shall mutually agree, acting reasonably, and with regard for the performance of the Executive’s essential duties to the Company pursuant to this AGREEMENT. Notwithstanding any Company policies regarding the accumulation of vacation time, it is specifically agreed that the Executive may accrue and accumulate vacation time without any "cap" or limitation.

  5.5 Other Fringe Benefits . The Executive shall be entitled to any other fringe benefits which are provided to the other senior officer(s) of the Company.

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• 6.1 Number . Subject to the approval of the Company’s Board of Directors, on the Commencement Date the Executive shall be granted options ("Options") to purchase shares of the Company’s Common Stock (the "Shares") under the Plan (as defined below) at the then-current fair market value of such Common Stock as determined by the Company’s Board of Directors. The number of Options to be granted to the Executive ("Initial Options") shall be equal to 1% of the Company’s then-outstanding and fully diluted shares, the calculation of which shall be determined by adding the following: (a) Shares issued and outstanding at the time of the grant, (b) all Shares available for issuance upon exercise of options currently outstanding under any option plan of the Company, (c) Shares reserved for issuance pursuant to options available under any option plan, or amendment to any option plan, approved by the stockholders of the Company at the stockholders’ meeting held to approve the transactions contemplated in the Merger Agreement (the "Plan"), (d) Shares reserved for issuance upon the exercise of outstanding warrants of the Company and (e) Shares resulting from the full conversion of the convertible senior subordinated note issued by Plainfield Offshore Holdings VIII Inc. The Board of Directors may, from time to time, make additional grants of Options to Executive in its sole discretion.

  6.2 Vesting . The Initial Options shall vest as follows:

  • • 6.2.1 Except as otherwise provided in this AGREEMENT, none of the Initial Options shall vest until the Executive has completed one full year of Service, as such term is defined in the Plan.

      6.2.2 On the date on which the Executive completes one full year of Service, one-third (1/3 ^rd ) of the Initial Options shall vest, and thereafter the remaining two-thirds (2/3 ^rd ) unvested options shall vest in equal monthly increments over the next 24 months.

      6.2.3 As of the date of a Change of Control, notwithstanding the vesting and/or exercise schedule of any Options then held by the Executive (including, but not limited to the Initial Options), all stock options then held by the Executive shall become fully vested and shall be exercisable by the Executive at any time in the one year and ninety (90) days following such Change of Control as defined under Section 8.6.

  6.3 General Terms Pertaining to Options . The Options shall be granted under, and subject to the foregoing provisions and shall be governed by the terms of the Plan (as it may be amended from time to time in the future) and any option agreement issued to the Executive thereunder. All Plan provisions not contradicted by the terms of this AGREEMENT (including, but not limited to, provisions regarding timing and manner of, and deadlines for, exercise) shall apply to the Options to be granted to the Executive hereunder. If a conflict exists between the provisions of the Plan and the provisions of this AGREEMENT with respect to Options, the provisions of this AGREEMENT shall control.

  6.4 Initial Option Grant . The granting of the Initial Options to the Executive shall be a material term of this AGREEMENT.

• Upon presentation of appropriate documentation, the Company shall reimburse the Executive for reasonable, out-of-pocket business expenses incurred by the Executive in the course of his performance of his duties hereunder. The Executive will submit expense reports for approval by the Chief Executive Officer of the Company at least monthly.

• The Executive’s employment may be terminated in accordance with the following provisions and if the Executive’s employment is so terminated, then, except as specifically stated in this Article 8, all of the compensation and benefits to which he was entitled shall cease upon the effective date of such termination (the "Termination Date").

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• 8. 1 At the Election of the Company With Cause . The Company may, immediately and unilaterally, terminate the Executive’s employment and this AGREEMENT "with cause" at any time upon written notice to the Executive setting forth the reason(s) for such immediate termination and stating that the termination is "with cause." For purposes of this AGREEMENT, the term "cause" shall mean any and all of the following:

  • • a. the Executive’s commission of a material breach or material non-performance of any of the terms or conditions of this AGREEMENT, provided that the Executive is given written notice of such material breach or non-performance, and fails to remedy the same within thirty (30) days of his receipt of such notice.

      b. the Executive’s commission of any act of theft, fraud or material dishonesty or misconduct involving the property or affairs of the Company or the carrying out of Executive’s duties hereunder.

      c. the Executive’s conviction of any felony.

      d. the Executive refuses or fails to implement or comply with any reasonable directive issued by the Company’s Board of Directors and Executive fails to remedy the refusal or failure within thirty (30) days of receipt of written notice thereof.

  If the Company elects to terminate the Executive’s employment with cause, as defined above, the Executive shall not be entitled to any further compensation or benefits, all unvested Options granted to the Executive shall be forfeited, and the expiration date for exercise of all vested Options granted to the Executive shall be determined in accordance with the terms of the Company’s Plan . Termination of the Executive’s employment with cause pursuant to this Section 8.1 shall be in addition to and without prejudice to any other right or remedy to which the Company may be entitled at law, in equity, or under this AGREEMENT.

  8.2 At the Election of the Company Without Cause . The Company may, immediately and unilaterally, terminate the Executive’s employment and this AGREEMENT at any time for any reason upon written notification to the Executive. If the Company so terminates pursuant to this Section 8.2, and subject to the Executive’s execution of the General Release attached hereto as Exhibit A, and further subject to Executive’s continued compliance with the obligations imposed upon him by Article 10 of this AGREEMENT, the Company shall pay to the Executive severance compensation ("Severance") equal